Measures to Address Tax Revenue Shortfalls Including Use of Government Special Accounts
"Government's Tax Revenue Measures Implemented Without Parliamentary Approval"
The Democratic Party criticized the government's response to the 30 trillion won scale tax revenue shortfall, stating that it infringes on the National Assembly's authority to review and finalize the budget. The party urged measures through the issuance of local currency worth 10 trillion won.
On the 28th, the Democratic Party's Policy Committee and others commented on the government's announced tax revenue shortfall measures, saying, "With the added shock of fiscal contraction, this year's growth is expected to be at best 2%," and pointed out, "The government plans to cover 15 trillion won of the shortfall by mobilizing available funds from reserves, and cut fiscal expenditures by about 15 trillion won, which causes a corresponding loss in domestic demand and economic growth."
In this regard, the government decided to utilize up to 16 trillion won from public fund management funds, foreign exchange stabilization funds, housing and urban funds, and other special accounts' surplus resources to cover the tax shortfall. Additionally, it announced a reduction of 6.5 trillion won in local allocation tax and education grants sent to local governments, and plans to use up to 9 trillion won of unused budget.
The Democratic Party stated, "The government should use fiscal policy to stimulate the economy amid domestic demand stagnation, but instead it is playing a role in shrinking the economy and eroding growth," and urged, "The government should face economic realities and immediately withdraw the tax cut and fiscal austerity policies that are damaging the economy by prioritizing doctrinaire fiscal soundness."
There were also criticisms that the government infringed on the National Assembly's budget review authority. The Democratic Party said, "Following last year, the government is unilaterally implementing measures to respond to the tax revenue shortfall amounting to tens of trillions of won this year as well, without National Assembly approval through supplementary budget legislation," and added, "This infringes on the National Assembly's authority to review and finalize the budget, and since in-depth discussions in the National Assembly are necessary to share the burden caused by the tax revenue shortfall, the government is requested to correct this."
Conversely, the Democratic Party proposed the issuance of local currency worth 10 trillion won to support self-employed workers and others. The party said, "To revive local and neighborhood markets, an additional 10 trillion won of local currency should be issued, and about 2 trillion won should be invested from the national treasury to support a 20% discount cost," adding, "Such funds can be sufficiently secured through unused contingency funds or adjustments of unnecessary expenditures. As this is the last and only fiscal measure for livelihood recovery that the government can take this year, we hope for a decisive action."
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